By Dr. Gary L. Deel, Ph.D., J.D.
Faculty Director, School of Business, American Public University

This is the eighth article in a 12-part series, adapted from my dissertation work at the University of Nevada Las Vegas, on the discord between academe and industry over the role of hospitality education and the purpose it serves in career development for hospitality professionals.

In the previous parts, we looked at reasons why many hospitality industry practitioners criticize the value of a formal education in hospitality. Here, we’ll look at two socioeconomic theories of higher education and their implications for the value of hospitality education programs.

Start a hospitality degree program at American Public University.

Higher Education and Career Preparation

Economists, sociologists, and behavioral psychologists spent the better part of the last century trying to answer such questions as why people pursue higher education, whether higher education actually better prepares us for the range of professional opportunities within our respective disciplines, and how (if at all) education affects hiring decisions.

As can be expected from such a wide variety of perspectives, there are several competing — and in some ways incompatible — theories that underpin this research.

Becker’s Human Capital Theory

One relevant theory is the human capital theory (HCT), first proposed and published by Gary Becker in 1975. Becker essentially posited that businesses make employment decisions based upon optimizing productivity.

Consequently, people will tend to invest in maximizing their own potential productivity (i.e. human capital) to the extent that the benefits of such investments exceed the costs. The idea that in this new “Information Age,” a greater degree of technical proficiency in different disciplines is needed to compete effectively is frequently cited as evidence of HCT.

First, Becker explained that a person’s worth, in terms of economic value to a business, is determined by his or her potential productivity. Therefore, employers look to make recruitment decisions based on optimizing productivity, while compensation scales are typically based on a grading of perceived potential productivity.

People Perceived to Potentially Be More Productive Are Offered Higher Pay

People who are perceived to have the potential to be more productive are offered higher pay. The opposite is true for those who are perceived to have less productivity potential.

This is true within any given organizational level and when comparing levels themselves. Managers are typically paid more than line-level employees, and managers with better perceived productivity than their fellow managers may also be paid more because of their perceived superior value.

Becker then considered this idea in light of the fact that higher education graduates typically are paid more than their less-educated counterparts. He inferred from this that employers perceive higher education graduates as having greater potential for productivity.

Ergo, ignoring all other factors, Becker theorized that individuals who pursue higher education do so in the interest of increasing their perceived potential productivity, thus optimizing their own human capital. They do so with the expectation that such an investment will yield a workplace increase in compensation that will more than offset the costs of their higher education.

In hospitality, HCT has been applied in such contexts as compensation for hotel managers as well as barriers to career growth for African Americans and others. Generally, results from academic studies supported HCT’s relevance as one explanation for the purpose of higher education.

Weber’s Credentialist Theory and Higher Education

A competing theory, as it pertains to education as a factor in employment decisions, is the credentialist theory (CT). Credentialism has its roots in Max Weber’s idea of social stratification through educational credentialing.

Weber posited that “the elaboration of diplomas from universities, business and engineering colleges, and the universal clamor for the creation of further education certificates” had the effect of limiting the candidate pool for certain jobs to members of the elite social class of degree holders. As such, higher education serves to stratify the labor market based on credentials.

In serving this socioeconomic function, CT has been summarized by several propositions. First, the primary function of credentialing is not to denote technical expertise in a given discipline. Rather, it serves a cultural and exclusionary purpose that stratifies the labor market based upon degree thresholds as opposed to years of schooling.

Second, credentialing creates a positional power in the degree holder. The formal authority derived by virtue of possessing a degree precludes all those without such authority from questioning the integrity of the skills purported to be possessed by the degree holder.

Third, credentials are monopolized by degree holders to exclude all those who do not possess such credentials. Credentials are also used by employers as measures of the trustworthiness of candidates who are being considered for positions with considerable amounts of discretionary power.

Finally, credential “inflation,” in which many credentials are awarded at the top of a credentialing hierarchy (e.g. an increase in the number of bachelor or masters degrees awarded in a given discipline), may result in further differentiation and expansion of educational credentialing (e.g. the creation of doctoral or specialist degree programs) and possible intervention by regulatory authorities to rebalance labor markets (e.g. reducing the number of students admitted to certain programs).

CT therefore turns not on what knowledge and skills are necessary to do the job, as HCT would suggest. Rather, it turns on what credentials are needed to get the job. Unlike HCT, CT purports that human beings are motivated to pursue higher education not for the benefit of increased productivity, but for the purpose of breaching the lines in occupational strata created by credentialing schemes.

According to CT, prospective employees are concerned with getting the degree so that they are not excluded from the pool of eligible candidates for reasons of culture fit and trustworthiness, as opposed to a genuine ability to do the job.

In hospitality, credentialing has only been explored in limited contexts for nutrition professionals. But CT remains a viable explanation for the purpose of higher education.

In the next part of this series, we will look at Job Market Signaling Theory and Filtering Theory as additional explanations for the value of higher education in hospitality.

About the Author

Dr. Gary Deel is a Faculty Director with the School of Business at American Public University. He holds a J.D. in Law and a Ph.D. in Hospitality/Business Management. Gary teaches human resources and employment law classes for American Public University, the University of Central Florida, Colorado State University and others.